MENU

Petrol prices set to soar

A combination of the falling Australian dollar and rising oil prices could see Australian motorists paying up to $1.70 a litre in the coming months – and that’s just normal unleaded fuel.

The Australian dollar in hitting 90 US cents, and further falls are possible, meaning oil and petroleum, which is priced in US dollars becomes more expensive. The dollar’s fall from $1.05 down to around 90 cents in the past couple of months has already added at least 11 cents to the price of a litre of petrol, according to news.com.au.

Australia imports most of our oil, so we can expect to pay more for our petrol as the Australian dollar slides.

The price of oil is also shooting higher, on concerns about political instability in Egypt. While Egypt is not a major oil exporter, it does control the Suez Canal, through which around 2 million barrels of oil are transported daily, and is thus a crucial supply route.

Unleaded petrol prices are already above $1.50 in most regions and states across Australia, with some regions in Western Australia seeing prices over $1.60 a litre. Some Northern Territory motorists are already facing paying more than $1.70 a litre, according to motormouth.com.au. And if your car requires premium unleaded fuel, many New South Wales suburban drivers are paying $1.70 for the privilege already.

Coles Express, owned by Wesfarmers Limited (ASX:WES), petrol stations close to the Sydney CBD are charging a whopping 177.9 cents per litre for premium unleaded. That could mean prices of over $2.00 per litre for some motorists in the near future, if the dollar keeps falling.

Victorian drivers appear to be faring a little better, with Caltex Australia (ASX:CTX) service stations in Melbourne charging around 150.9 cents a litre for premium unleaded, while Woolworths Limited (ASX:WOW) branded service stations in Perth are advertising prices of around 162.9 cents a litre.

Foolish takeaway

Economists are concerned that high petrol prices will add to inflation, but also lead to households cutting back on their discretionary spending. That’s bad news for the retail sector and retailers like Harvey Norman Holdings (ASX:HVN), which are already struggling in a weak economic environment.

In the market for high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool writer/analyst Mike King owns shares in Woolworths.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.